14 Abb. Pr. 331 | N.Y. Sup. Ct. | 1862
William McClelland and one Elizabeth Hasluck, a married woman, were copartners in the business of selling wines and liquors of various descriptions, at the corner of Myrtle Avenue and Pearl-st., in the city of Brooklyn, under the name and firm of Wm. McClelland & Co. The plaintiff, John McClelland, was a creditor of the firm, his debt being $357, for goods sold and delivered on June 2d, 1860. An instrument in writing was executed and delivered to the plaintiff, bearing date on that dajr, and purporting to be made between William McClelland and Elizabeth Hasluck, copartners, under the name and firm of William McClelland & Co., of the first part, and John McClelland, of the second part. It recited the existence of a debt for $357 to John McClelland, their inability to pay it, and their willingness to assign the co-partnership property for the benefit of the creditor. It then proceeds to assign over the goods, merchandise, accounts, choses in action, and effects of the firm to the plaintiff, upon the trust to sell and convert into money, either at public or private sale, and to collect the debts and choses in action, pay all reasonable expenses and costs of executing the assignment, and with the residue pay the debt due to the plaintiff of $357, with the interest, and then to pay whatever may remain of such moneys, if any, to the parties of the first part to the said instrument. This paper was executed under seal by William Model-
The existence of the debt from the firm of William McClelland & Co. to the plaintiff was not disputed upon the trial, so that the relation of debtor and creditor between the parties to the deed of assignment was fully established. The cases distinguish, and there is an obvious distinction in principle, between an assignment by a debtor of his property to trustees upon trust for the payment of particular and specific debts, reserving the surplus to the debtor, and an assignment by a debtor of his property and effects to his creditor upon the trust to sell and pay his own debt, reserving the surplus to the debtor or his assigns. The latter is in effect a mortgage; and when the debt which it is designed to secure is paid, the property reverts to the original owner. The surplus is always within the reach of the other creditors, and can by a creditor’s bill, or proceedings supplementary to the execution, be attached and appropriated to the payment and satisfaction of their debts. Such a disposi
The remaining question in the case arises upon the power of one partner to assign over and transfer to a creditor the partnership effects in payment of, or as security for, the payment of his debt. Elizabeth Hasluek did not unite in or assent to the executing of the deed'of assignment, but it was the act of William McClelland solely. It cannot escape notice in this connection, that while the plaintiff claims the property under an instrument made in the name of the firm by one copartner, the defendant claims to hold it under an execution issued upon a judgment confessed by the other copartner. Still, the legal problem remains to be solved by the aid of principle or authority. The right of one partner to make a general assignment of the copartnership effects to a trustee for the payment of debts, giving preferences, has been denied by very competent and respectable authority, and probably does not exist. It may still be regarded as an open question, not having yet passed the ordeal of the court of last resort in this State. But the authority of one copartner to sell the copartnership property to a particular creditor or creditors in payment of their debts, has been judicially determined, and is now the settled law. The power of a partner to dispose of the property of the firm extends to assignments of it as security for antecedent debts as well as for debts thereafter to be contracted on account of the firm. Lord Mansfield, in a celebrated case (Fox a. Hanburgh, Cowp., 445), decided that even after an act of bankruptcy committed by one partner, an assignment Iona fide of partnership effects by the solvent partner to a creditor of the firm in payment of his deb't was binding on the firm. (Collyer on Part., 395.) Mabbett a. White (12 N. Y., 442) decides that one copartner has authority to sell and transfer all the copartnership effects directly to a creditor of the firm in payment of a debt, without the knowledge or consent of his copartner, although the latter is at the place of business, and might be consulted. Nor is the validity of the sale affected by the insolvency of the firm at the time, and the preference which the purchasing creditor will thus acquire over the others. If I am right in thinking the instrument of assign
Judgment should be entered npon the verdict for the plaintiff.
Present, Brown, Schrugham, and Lott, JJ.